STATE OF THE MARKETS
Stocks mixed as yields stalled . US stocks closed mixed on Monday as investors continue to weigh earnings reports and expected 75 basis points hike this Wednesday. Russell (+0.60%) climbed the most, followed by Dow (+0.28%) and S&P (+0.13%) while the tech laden Nasdaq (-0.43%) edged lower amid concerns over big tech earnings.
Yields were stalled as investors continued to bid the Dollar in anticipation of higher rates. The 10Y (2.78%) yields below the 1Y (3.10%) and 2Y (3.02%) as the Dollar climbed back above the 107 handle at writing.
In the commodity markets, crude remains firm above the $97.50/bl as supply concerns continue to float the black gold. Similarly, gold was well supported above the $1,715.50/oz as safe haven demand increased amid the on-going tension between Germany and Russia over the gas supply. Elsewhere, iron ore was little changed at around $105.40/tn as investors await for the next catalyst.
In the FX space, demand for safe haven Yen remains elevated in the long and medium term accounts while short term traders were seen bidding more Sterling, Dollar, Loonie and Euro. King Dollar seemed to return to strength in the short term though was sold off in the medium term accounts.
On Tuesday, markets expect a cautious trading while looking for earnings reports from big names like Microsoft (MSFT), Visa (V), Coca Cola (KO), Alphabet (GOOG), Mondelez (MDLZ), UBS Group (UBS), McDonalds (MCD), United Parcel Service (UPS), Texas Instruments (TXN), Raytheon (RTX), 3M & Co (MMM), General Electric (GE), General Motor (GM) and Kimberly-Clark (KMB) as well as the latest numbers on US housing markets.
OUR PICK – AUD/JPY
Bearish correlation to Kiwi. Though short and medium term sentiments were bullish but long term showed that Kiwi remains bearish across the board. We believe it’s a matter of time before Aussies follow suit as global growth concerns continue in the light of more hikes from central banks across the globe. RBA may hike rates but risk-off moves will see more safe-haven play in our view.
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